Bloomberg News

Rambus, Star Scientific, TiVo: Intellectual Property

September 25, 2012

Rambus Inc. (RMBS:US), which was sanctioned by a judge for destruction of documents in a U.S. chip-patent case with SK Hynix Inc. (000660), will only be required to pay what is defined as a reasonable royalty.

U.S. District Judge Ronald M. Whyte in San Jose, California, on Sept. 21 decided to strike from the record in the case any evidence supporting a Rambus royalty that is “in excess of a reasonable and non-discriminatory” amount, according to court documents. Whyte ordered both companies to file their proposals on the rate amount to the court.

“There is a possibility that Rambus did not destroy any evidence that would have been beneficial to SK Hynix’s litigation position,” Whyte wrote in his decision. “However, because Rambus is the party that destroyed documents by the box and bag without keeping any record of what was destroyed, Rambus must suffer the consequences of that uncertainty.”

Both Ichon, South Korea-based Hynix and Sunnyvale, California-based Rambus welcomed the decision.

The ruling “substantially limits any royalties on Rambus’s patents,” SK Hynix said in a statement.

Rambus is hopeful the decision “will lead to putting this matter behind us completely and allow us to reach reasonable agreements,” the company’s general counsel Thomas Lavelle said in a statement yesterday.

The ruling follows an appeals court decision last year concluding that Rambus destroyed documents relevant to its case against the South Korean company. The appeals court ruling sent the case back to Whyte to determine appropriate sanctions.

SK Telecom Co. completed acquiring a 21 percent stake in Hynix Semiconductor Inc. in February, becoming the biggest shareholder, according to data compiled by Bloomberg.

The U.S. Court of Appeals for the Federal Circuit in Washington upheld Whyte’s denial of Hynix’s bid to throw out a 2006 verdict finding the company infringed Rambus patents or grant a new trial. It vacated the financial damages judgment, throwing out a $397 million judgment against Hynix, because of the document spoliation.

Rambus’s cases against Hynix, and another related case against Micron Technology Inc. (MU:US), are over the companies’ use of interfaces that are part of dynamic random access memory that acts as the main memory in computers. DRAM is built to industry standards and is interchangeable by product. Hynix and Micron claimed Rambus got rid of papers that would have proved Rambus misled the board that sets that standard.

The case is Hynix Semiconductor Inc. v. Rambus Inc., 00-cv- 20905, U.S. District Court, Northern District of California (San Jose).

Star Scientific, Reynolds End Patent Suit, Filing Shows

Star Scientific Inc. (STSI:US) and R.J. Reynolds Tobacco Co. said they have settled their patent-infringement dispute over a way to reduce carcinogens in cigarettes.

Financial terms weren’t disclosed in documents filed yesterday in federal court in Greenbelt, Maryland, seeking dismissal of lawsuits. The companies said the agreement “is not an acknowledgment of liability of any party.”

A federal appeals court last year left two Star patents intact while upholding a jury verdict that R.J. Reynolds, a unit of Reynolds American Inc. (RAI:US), didn’t infringe them during the 2001 and 2002 tobacco-growing seasons. A separate Star lawsuit accused Reynolds of infringing the patents during later growing seasons.

Reynolds said in the filings that it reserves the right to rely on the non-infringement finding in any future legal actions.

Reynolds was asking the U.S. Supreme Court to invalidate the two Star patents. The justices had been scheduled to consider that bid at their private conference yesterday. Instead, the two companies on Sept. 21 submitted a joint request that the appeal be dismissed, and the request was granted.

Reynolds had argued in its appeal that the Star patents aren’t specific enough. The patents cover a curing process that prevents “bacterial activity” in tobacco leaves, resulting in the lowest levels of cancer-causing nitrosamines, according to Star.

Star said Reynolds used the technology without permission because the larger company was unable to achieve similar nitrosamines reductions on its own. Reynolds denied the claim.

R.J. Reynolds makes Camel, Winston and Salem brand cigarettes and is based in Winston-Salem, North Carolina. Star Scientific is based in Glen Allen, Virginia.

The case is Star Scientific Inc. v. R.J. Reynolds Tobacco Co., 01cv1504, 02cv2504, and 09cv1411, all U.S. District Court for the District of Maryland (Greenbelt). The Supreme Court case is R.J. Reynolds v. Star Scientific, 11-1182.

TiVo Achieves $250.4 Million Patent Settlement With Verizon

TiVo Inc. (TIVO:US), the pioneer of digital-video-recording technology, will receive at least $250.4 million under a patent- litigation settlement with Verizon Communications Inc. (VZ:US)

The TiVo agreement requires Verizon to make an initial cash payment of $100 million, followed by quarterly payments totaling $150.4 million through July 2018, Alviso, California-based TiVo said yesterday in a statement. Verizon also will pay monthly license fees for every Verizon DVR subscriber beyond a predetermined level.

“We are pleased to reach an agreement with Verizon which underscores the significant value our distribution partners derive from TiVo’s technological innovations and our shareholders derive from our investments in protecting TiVo’s intellectual property,” TiVo Chief Executive Officer Tom Rogers said in the statement.

TiVo, which developed the first commercially available DVR, has struggled to capitalize on the invention over its 15-year life. The company has lost money in eight of the past 10 years.

Verizon also settled yesterday with CloudTV developer ActiveVideo Networks Inc. of San Jose, California, for $260 million, according to a separate statement.

ActiveVideo makes virtual set-top box applications that allow users to stream video to televisions and other devices. Verizon and ActiveVideo agreed to cross-license certain patents and to not sue each other for an unspecified number of years.

Verizon and RedBox are testing a streaming video rental service called RedBox Instant that is expected to deliver video in select markets by Christmas.

For more patent news, click here.

Trademark

Xerox Trademark Retains Protection in India, Board Rules

Xerox Corp. (XRX:US) prevailed in a challenge to its “Xerox” trademark in India, the Hindu reported.

The owner of a photocopying shop had petitioned India’s Intellectual Property Appellate Board to remove “Xerox” from the registry of trademarks on the grounds that it had become through use a synonym for photocopying, the Hindu reported.

The board said that after almost 50 years with no challenges to Xerox’s Indian trademark, “we do not think the mark deserves to be removed,” according to the newspaper.

In its ruling the board notes that Norwalk, Connecticut- based Xerox has objected to the casual use of the term by government agencies in India, and the response was always a promise to avoid such errors in the future, the newspaper reported.

Cravatex Trademark License From Fila Extended for 30 More Years

Cravatex Ltd. (CRAV), a Mumbai-based sportswear manufacturer, will be a Fila Korea Ltd. (081660) licensee for another 30 years, the Economic Times reported.

Seoul-based Fila will double the number of stores in India to 200 in the next two years, according to Economic Times.

The Fila’s 30-year license with Cravatex aims to give the Indian company plenty of time to invest more in the business, Economic Times reported.

Fila presently has a 5 percent market share in India’s sportswear market, and intends to double that by 2015, according to Economic Times.

For more trademark news, click here.

Copyright

Dotcom Says He’s James Bond Villain as NZ’s Key Orders Spy Probe

New Zealand Prime Minister John Key ordered an inquiry into allegations the country’s spy agency conducted illegal surveillance and wiretaps of people tied to Megaupload.com, whose founder Kim Dotcom is accused of the biggest copyright infringement in U.S. history.

The Government Communications Security Bureau, which provides New Zealand with foreign intelligence, acted unlawfully in helping police find individuals connected to Megaupload and illegally acquired communications, Key said in an e-mailed statement yesterday, citing a court filing by prosecutors. Key didn’t name any of the people involved.

Dotcom, 38, was indicted in what U.S. prosecutors dubbed a “Mega Conspiracy,” accusing his file-sharing website of generating more than $175 million in criminal proceeds from the exchange of pirated film, music, book and software files. He faces as long as 20 years in prison for each of the racketeering and money-laundering charges in the indictment, with the U.S. seeking his extradition for a trial in Virginia.

“I’m now a real life James Bond villain in a real life political copyright thriller scripted by Hollywood and The White House,” Dotcom said on the social media site Twitter after Key’s statement. “Please extend the inquiry to cover the entire Crown Law Mega case.”

Key referred the probe to the Inspector-General of Intelligence and Security after he was informed on Sept. 17, according to the statement. He has asked the independent officer to offer recommendations to prevent a recurrence.

The probe should examine the U.S. role in the illegal spying, Dotcom’s U.S. lawyer Ira Rothken said in a phone interview from the Auckland suburb of Coatesville.

“We want to know if the U.S. was aiding or abetting domestic spying in New Zealand,” said Rothken, of San Francisco-based Rothken Law Firm. “It’s something that must be scrutinized, not only to protect Kim Dotcom’s privacy but to protect the privacy of all New Zealanders.”

Dotcom is also attempting to prove that the Jan. 20 search and seizure of his leased Auckland property were unreasonable. He is seeking recovery of computers and hard drives that were taken by police. A New Zealand police officer overseeing the raid questioned whether using helicopters was “over the top” in an August court hearing.

“I expect our intelligence agencies to operate always within the law,” Key said. “Their operations depend on public trust.”

The case is Kim Dotcom v. Attorney General, Civ 2012-404- 1928. High Court of New Zealand (Auckland).

Counsel Didn’t Infringe Copyright With Complaint, Court Rules

An attorney whose client sued him for copyright infringement won his bid to have the complaint dismissed.

Bernard Gelb of Regal Park, New York, sued his former attorney for infringement after the lawyer filed a complaint Gelb claimed infringed the copyright to a complaint from an earlier case.

Gelb, who runs a business that reunites unclaimed financial property with its owners, hired Norman A. Kaplan of Great Neck, New York, to represent some of his clients in a class action against Chase Manhattan Bank.

After the two had a falling out, Kaplan said he wouldn’t work with Gelb any longer, although he would continue to represent the original clients, and filed a second complaint in the case, according to court papers.

Gelb then sued for infringement in April 2011, claiming he, rather than the lawyer, was the author of the original complaint, and that by re-filing it, Kaplan infringed his copyright.

A federal judge in Central Islip, New York, rejected Gelb’s claims. In her Sept. 19 ruling, U.S. District Judge Carol Bagley Amon said that the lawyer had an implied license to use the complaint. She also noted that as a non-lawyer, Gelb wouldn’t have represented his clients in court and required the services of Kaplan.

Gelb argued in his complaint that Kaplan didn’t do any of the legal work. Judge Amon disagreed, saying that since the docket in the underlying class action indicated Kaplan made at least 11 filings on behalf of Gelb and his client, the lawyer “indisputably” provided legal services.

Kaplan acted within the scope of his implied license by filing the second complaint, she said.

The case is Unclaimed Property Recover Service Inc. v. Norman A. Kaplan, 2:11-cv-01799-LDW-ARL, U.S. District Court, Eastern District of New York (Central Islip).

To contact the reporter on this story: Victoria Slind-Flor in Oakland, California, at vslindflor@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.


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Companies Mentioned

  • RMBS
    (Rambus Inc)
    • $11.64 USD
    • 0.09
    • 0.73%
  • MU
    (Micron Technology Inc)
    • $34.91 USD
    • -0.06
    • -0.17%
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